Analysis of Punjab Value added Tax (Second Amendment) Act, 2013 – Part 3

In a series of articles on the analsyis of Punjab Value added Tax (Second Amendment) Act, 2013 this is a third article in which the major amendments under Punjab VAT Act, 2005 are discussed herebelow:

Amendment in section 29-Assessment provisions:

Extension of time limit for the assessment: Section 29(4) of Punjab VAT Act, 2005 has been amended so as to provide for that an assessment u/s 29(2) or 29(3) may be made within a period of 6 years after the date when annual statement was filed or due to be filed whichever is later.

Thus time limit for the assessment has been increased from 3 years to 6 years. Earlier the time limit for the assessment was 3 years from the due or actual date of filing the annual statement and beyond 3 years the assessment could be framed only after the extension of time period for assessment is made by the Commissioner.

But now the default time limit for assessment has been made 6 years itself, that means assessment can be framed without any order for extension of Commissioner.

The proviso to section 29(4) providing for the extension of time limit of the assessment period has also been deleted.

In the proviso added to section 29(4) the time limit for framing the assessment of the cases of year 2006-07 in which annual statement has already been filed, has been extended till 20th November 2014.

Explanation to section 29(4) also clarifies that the limitation period of six years for an assessment under sub-section 2 or sub-section 3, shall also apply to those cases in which the aforesaid period of six years has not yet expired.

Thus in nut shell it means that the assessment from year 2006-07 onwards can be framed without any extension order from the Commissioner.

Explanation 2 and section 29(10-A) undermines the judgement of P&H High Court?: Explanation 2 added to section 29(4) very interestingly makes it clear that prior to the commencement of the Punjab Value Added Tax (Second Amendment) Act, 2013, the Commissioner was not required to issue any notice to the concerned person before extending the limitation period of assessment.

In newly added sub-section 29(10-A) under a non-abstante clause it has also been stated that irrespective of any judgement, decree or order of any court, Tribunal or other authority, an order passed by the Commissioner under sub-section (4) prior to the commencement of the Punjab VAT(Second Amendment) Act, 2013, shall not be invalid on the ground of prior service of notice or communication of such order to the concerned person.

It is worth noting that on the basis of judgement of Punjab & Haryana High Court in A B Sugar Mills Ltd vs State of Punjab it has been held in many cases that the Commissioner was required to issue prior notice before the extension of time limit of assessment beyond a period of 3 years. Whether such clarification undermines the Judgement of Punjab & Haryana High Court?

The purpose of such retroactive amendment is just to nulify the law already settled by the Judiciary. Judicial priinciples require that where the legislation is introduced to overcome a judicial decision, the power cannot be used to subvert the decision without removing the statutory basis of the decision.

“A competent legislature can always validate a law which has been declared by courts to be invalid, provided the infirmities and vitiating factors noticed in the declaratory judgment are removed or cured. Such a validating law can also be made retrospective. If, in the light of such validating and curative exercise made by the legislature granting legislative competence the earlier judgment becomes irrelevant and unenforceable, that cannot be called an impermissible legislative overruling of the judicial decision. All that the legislature does is to usher in a valid law with retrospective effect in the light of which the earlier judgment becomes irrelevant.” Ujagar Prints v. Union of India [1989] 179 ITR 317 (SC).

Insertion of section 46-A-Power to purchase under-priced goods: A new section 46-A has also been introduced which gives power to designated officer to purchase the under-priced notified goods. This section seem to have been introduced for curbing the tax evasion due to under pricing of the goods sold.

This newly added section gives power to the designated officer with the prior approval of the Commissioner or any other officer as the Commissioner may in writing authorise for this purpose, if he has reason to believe that any goods notified by the State Government whether in stock or in transit are under priced as shown in the document or books of account, may make an offer to purchase such goods at the price shown in the document or books of account, increased by 10 percent plus freight and other expenses.

If the owner accepts such offer the goods will be delivered by him on such date, time and place as directed by the officer, however if rejects such offer or fails to deliver such goods, then it shall be construed as conclusive proof that the owner has under priced the goods and the price of goods determined by the Designated officer to the best of his judgment shall be considered as the actual price of the goods.

This section is a step in the direction of curbing the tax evasion in case of under-priced goods. However in my view presumption as to the conclusive proof that goods are under-priced must be a rebuttable presumption, because there may be other reason for rejecting the offer of the officer for example a person may be having a binding contract to deliver the goods with the purchaser, in such case rejecting the offer may be the only option left with the owner.

However it should be noted that section 46-A is applicable only on the goods notified by the State Government for this purpose, unless such goods are notified, section 46-A will not be operational.

Also Read :-

Analysis of major amendments under Punjab VAT (Second Amendment) Act, 2013 – Part-1

Analysis of amendments under Punjab VAT(Second Amendment) Act, 2013 – part-2

to be continued…